How to ‘Double Your Dividends’

After all, the Fed’s zero interest rate policy (“ZIRP”) has been punishing savers with its low interest rates since 2009. Many retirees depending on their accumulated savings had grown increasingly frustrated trying to eke out income from their hard-earned investments. So, it’s no surprise that many had piled into income investments that promised regular high single-digit, or even double-digit, percentage income.

But with the Fed announcing the onset of tapering back in May — and then actually launching it in December — the bottom dropped out from virtually all “safe” income investments.

Income investors suddenly found that even if a diversified portfolio of, say, U.S. Real Estate Income Trusts (REITs) boasted headlines about double-digit yields, that mattered little if the principal dropped by 20%, thanks to the threat of rising interest rates.

Meanwhile, these same investors stood by as stock market investors enjoyed their biggest gains since 1997.